3.1introduction to finance

Question 1

procurement

Answer 1

The process of purchasing goods and services that are used by a business to produce its products.

Question 2

finance

Answer 2

is the process of acquiring and managing money for a business

Question 3

acounting

Answer 3

process of recording money flows and assets of a business

Question 4

capital expenditure

Answer 4

also known as investment, is spending on a company’s fixed assets.

Question 5

fixed asset

Answer 5

fixed asset is an item of property that has value and is owned by a person or business which the business plans on holding or using for longer than one year.

Question 6

examples of fixed assets

Answer 6

purchases of land, buildings and machines. Capital expenditure is the long-term investment in these assets.

Question 7

how is capital expenditure funded

Answer 7

using long-term finance. Investment in capital expenditure allows a business to grow in the future.

Question 8

examples of capital expenditure

Answer 8

factories
delivery trucks or other vehicles needed for the good or service
technology
production equipment

Question 9

revenue expenditure

Answer 9

Spending on a company’s general operational costs; this spending will enable the business to generate ongoing revenue.

Question 10

examples of revenue expenditure

Answer 10

utility bills, such as gas, electricity and water
paying wages and salaries to workers
paying suppliers
settling tax bills with the government
repayments of debts, such as mortgages and loans

Question 11

insolvency

Answer 11

A situation in which a business is unable pay its debts.

Question 12

how is revenue expenditure

Answer 12

funded using short-term or medium-term sources of finance.